Brunei Darussalam - Investment Opportunity
Brunei Darussalam welcomes foreign investment. Foreign investors are invited to actively participate in the current economic diversification programme of the country. The programme hinges on the growth of the private sector. The Ministry of Industry and Primary Resources was formed in 1989 with the responsibility of promoting and facilitating industrial development in Brunei Darussalam. Brunei Darussalam offers all investors an environment that is conducive to investment in terms of security, stability, continuity, confidence, and competitiveness.
Competitive investment incentives are ready and available for investors throughout the business cycle of start up, growth, maturity and expansion. The Investment Incentive Act provides tax advantages at start up and ongoing incentives throughout growth and expansion that are comparable with, if not better than, those offered by other countries in the region.
Industrial activities are classified into four categories:
- Industries related to national food security;
- Industries for local markets;
- Industries based on local resources; and
- Industries primarily for export market
Industrial policy incentives covering manpower development, ownership, government support and facilities remain open and flexible for all categories of industrial activity. Brunei Darussalam maintains a realistic approach in dealing with investors and entrepreneurs. Policies relating to ownership allow for full foreign ownership, majority foreign ownership and minority foreign ownership, as per the type of industry and the prevailing situation in that industry. Only activities relating to national food security and those based on local resources require some level of local participation or collaboration. Industries for the local market not related to national food security and industries for total export can be fully foreign owned. Overall, in Brunei Darussalam, any industrial enterprise would be considered favorably.
Brunei Darussalam offers vast land and a variety of facilities throughout all four districts of the country. The majority of the 12 industrial sites developed in recent years are available for occupation. Large areas for agro forestry development and aquaculture are also available. Rental terms and tenancy agreements are competitive and the sites offer a range of facilities including infrastructure and resources. Brunei Darussalam gives priority for ensuring stability for the natural environment.
As such, all sites are free from pollution and are ecologically well balanced. The Government philosophy is for sustainable development. Therefore, all polluting industries are banned and one of the important criteria for engaging an industry's participation is its likely impact on the environment.
As the focal point for all industrial development, the Ministry of Industry and Primary Resources coordinates all industrial development activities. For investments in Brunei Darussalam, the Ministry acts as a one-stop agency.
Thus it is pleasantly easy to start an industry in Brunei Darussalam. A totally private development initiative which does not require Government facilities needs only the approval of the government to start. Only those requiring government facilities and assistance need to deal with the Ministry of Industry and Primary Resources, which will liaise with other agencies and expedite applications.
The Ministry realises the importance of time bound progress and follows clear policy decisions to encourage new investors and to make their job easy. The entire procedure has only four stages:-
- Approval of the concept
- Approval of the firm proposal
- Approval of physical plans
- Approval to operate
Brunei Darussalam is still very much dependent on revenues from crude oil and natural gas to finance its development programmes. Apart from this, Brunei Darussalam also receives income from rents, royalties, corporate tax and dividends. Due to the non-renewable nature of oil and gas, economic diversification has been accorded overwhelming priority in Brunei Darussalam's national development agenda. In the current Ninth National Development Plan, 2007-2012, the government has allocated more than $7.2 $9 billion for the implementation of various projects and programmes.
Brunei Darussalam is the third largest oil producer in Southeast Asia and it produced 163,000 barrels per of crude oil in 2011. It is also the fourth largest producer of liquefied natural gas in the world.
Brunei Darussalam a growing economy which has been blessed with rich natural resources and a strategic location within the region. The major part of the country is covered with tropical rainforests, teeming with exotic flora and fauna. Anxious to promote the conservation of its lush green natural surroundings, eco-tourism has gained importance in the country's economic activities.
Human resources are central to the successful transformation of Brunei Darussalam into a diversified industrial economy. As in most developing nations, there is a shortage of skilled workforce in the country. Therefore, greater emphasis is placed upon education and training of manpower. The main areas of interest in human resources development are managerial and industrial skills, with particular emphasis on entrepreneurial skills as well as vocational and technical training.
Brunei Darussalam's main exports consist of three major commodities - crude oil, petroleum products and liquefied natural gas - sold largely to Japan, the United States and the ASEAN countries. The Government's move to promote non-oil and non-gas activities has been largely successful.
In its effort to diversify the economy, the Ministry of Industry and Primary Resources has identified a 'preferred list of industries', ie the lists of priority industries to be developed. Currently, there is tourism, production of primary sectors (chicken, eggs, fish, vegetables, etc.), food and beverage, handicrafts, building materials such as roofing and cement, switchboards, electrical cables, furniture, service industry, logistics and others.
By taking into account the advantage (strength) 'comparative advantage', 'competitiveness' and the opportunities available, the ministry has identified the following industries as industries to be developed in the medium term the tourism sector, brand bruneihalal, primary products, food and Beverages and handicrafts. In the long term, the ministry focuses on developing alternative renewable energy sector as well as Development of products from Biodiversity.
- Rice Production
Various efforts have been made by the government to encourage rice production during the last decade and the yield per acre has increased due to the introduction of better agricultural methods.
Approximately 290 tones or 1 percent of the nation's rice needs are produced locally from 613 hectares of rice fields scattered around the country.
As a first step towards the attainment of self-sufficiency in rice, the government launched in 1978 an experimental large scale mechanized rice planting project at Kampong Wasan. Covering an area of 400 hectares, the project was a joint venture between the Agriculture Department and the Public Works Department.It also aimed at planting padi twice a year, from April to September and from October to March.
To reach its target of food self-sufficiency Brunei introduced ‘Laila Rice ‘ planting ceremony in April 2009, and the Royal Family encouraged paddy growers by reaping the first few stalks of ‘Laila padi’ from the fielkd.
- Fruit Farming
Fruit farming is largely performed on a small scale. There is a vast range of locally produced tropical fruits, which supply some 11% of domestic requirements of more than 14,000 tones. In 1975, the Agriculture Department initiated a fruit-farming scheme to encourage fruit cultivation in the country. In an effort to increase the production of local fruits, the government through the agricultural stations in Batang Mitus, Tanah Jambu and Lumapas, planted seedlings of various fruit trees including rambutan, durian and oranges.
Locally grown vegetables constitute about 6,700 tones or just over 65 per cent of the country's needs. The produce increases gradually as more and more people are taking up vegetable farming.
The country produces about 1,000 head of cattle and bufaloes for the market annually at about six percent of its own beef consumption, The Government assists local stock farmers with calves, machinery, feed, seedlings, fertilizers and veterinary care. The country requires 3,000 to 5,000 tones of meat annually, with per capita consumption of between 9 and 17 kg. To meet demand, it has to import an average of between 4,000 and 7,000 heads of live cattle from its Wileroo Ranch in the Northern of Australia. Local fresh milk production contributes about 199 thousand litres annually.
Research has been carried out to ascertain the best possible way to increase the buffalo population. Towards this end, the Agriculture Department has launched a research project covering 4000 hectares in the Batang Mitus area in the Tutong District. So far, over 200 hectares have already been brought under this project. The farm's main aim will be to biologically combine local and imported stock towards producing hybrid buffaloes for commercial purposes.
About three quarters of Brunei Darussalam's total land area are covered by forests. However, their contribution to the economy is minimal. Logging, limited to 100 thousand cubic meters annually, is confined to meeting local needs only.
With the proclamation of the 200 nautical miles for Brunei Fisheries limits in 1983 and the identification of potential areas for fisheries activities, the value of fisheries industry is estimated to be worth more than B$200 million. At the present exploitation and utilisation, the fisheries sector of Brunei Darussalam, comprising capture, aqua-culture and seafood processing contributed about 0.5% of the total Gross Domestic Product (GDP), or about B$37.2 million, at current prices. It provides work to more than 1,500 involved in this sector. The 2001 catch of fish and other sea food totalled 1,492 tonnes.
The country has good potential for exports, but lacks in resources, including technology. The development of fishing industry in Brunei, thus, needs foreign investment. The government, through the Fisheries Department therefore, has been trying to attract suitable foreign involvement, either in the form of joint partnership or strategic alliances, aimed at developing the fisheries sector to a competitive, efficient and commercially lucrative venture.
Oil & Gas
Crude oil and liquefied natural gas are the main exports of Brunei Darussalam. From January to June 1998 it exported 134.77 trillion BTU or 88.94 per cent of the production to Japan and 16.75 trillion BTU or 11.06 percent to the Republic of Korea.
Under a Sale and Purchase Extension Agreement signed by BLNG and the Japanese buyers in 1993, the LNG Plant at Lumut exports annually about 5.54 million metric tons of LNG to Japan. In June 1998, an amendment was made in the agreement increasing the sales by an additional 14 cargoes per annum to Japan effective from 1999 to 2013.
In October 1997, a sale and purchase agreement had been signed to deliver 0.7 million metric tons of LNG to the Republic of Korea until the year 2013. In total, 200 'B' class LNG cargoes equivalent will be delivered annually to the buyers in Japan and the Republic of Korea from the year 1999 to 2013as per the current arrangements among the countries.
In March 1998, the Government of His Majesty the Sultan and Yang Di-Pertuan of Negara Brunei Darussalam formed a Joint-venture company tso have a collaboration with Shell International Gas and Mitsubishi Corporation. The Oil and Gas accounted for about 36 per cent of the country’s Gross Domestic Product in 1996. Production tended to fall. But the high level of crude oil production in Brunei is maintained through the increase in offshore oil fields production.